THE FUTURE OF PROGRAMMATIC: BREAKING NEW GROUND — PART TWO

01/05/2018

In the first part of this blog we explained that the explosive growth of mobile is generating massive amounts of location-based data. This, in turn, is driving the opportunity — and the appetite — to expand the reach of localized programmatic technologies to target more efficiently and effectively. A logical next step in this evolution is to open up more diverse media types to be bought and sold programmatically.

You can read about two upcoming opportunities we described in the first blog: programmatic OTT which allows advertisers to apply the targeting capabilities of digital media to connected TV advertising and Out-of-Home (OOH) or outdoor advertising (that is, billboards, elevators, bus stops, subways, cars, and more).

In the second part of this series, we will highlight two additional fast-approaching programmatic opportunities: programmatic audio/radio and smart speakers.

MUSIC STREAMING AND INTERNET RADIO

Digital music streaming and internet radio are very specific to a localized marketplace and personalized to the individual user – a perfect environment for programmatic targeting to shine.

Spotify joined the ranks of Soundcloud and Pandora in early 2017 by announcing plans to expand into programmatic advertising. Spotify’s programmatic advertising business is now live in 20 countries and reaches over 140 million users. Not a bad start.

We think it’s only the tip of the iceberg. On the surface, audio may appear to be the least exciting of digital channels. But, in fact, there is great untapped promise for this advertising format.

Audio advertising is a century-old format, but it is still gaining momentum. About 90% of the one billion global streaming listeners choose ad-supported channels, reports XAPPmedia. And ad-supported internet radio is projected to triple from $1.6 billion in 2015 to $4.7 billion by 2025 (Economics of Internet Music and Radio).

Advertising on music streaming platforms and internet radio offers marketers certain distinct advantages. It doesn’t require a listener’s full attention to deliver an impression. Moreover, consumers can’t skip it, and at only 15 to 30 seconds, they’re unlikely to mute it. Audio is also uniquely ubiquitous. It can intersect with our lives from our most active to our most quiet moments—from the kitchen counter to the gym to the car to workplaces to the bedroom to the moment when we are drifting asleep.

More than just offering advertisers automated access to spots ‘n’ dots, the real potential of applying programmatic buying principles to digital audio lies in allowing marketers to tap millions of engaged listeners in increasingly targeted ways using relevant data (e.g., location, time of day, device and, in the case of Spotify, for example, data about the demographic, genre and even the playlist).

SMART SPEAKERS

In a converging trend, smart speakers are blasting off. Two-year-old Amazon Echo and 10-month-old Google Home are soon to be joined by the newbie, Apple HomePod, in early 2018. eMarketer reports that 45 million voice-assisted devices are now in use in the U.S. and predicts that the number will hit 67 million in 2019.

Smart speakers are wireless devices that feature voice-activated digital assistants. Today, smart speakers can help with everyday tasks, control your smart home and play audio on command. And users are loving them. In fact, in an Edison report, 70 percent of smart speaker owners say they now listen to more audio at home, 65 percent said they wouldn’t want to go back to not having a speaker at home, and 42 percent call it “essential” to their everyday lives. An amazing 42 percent of smart speaker owners own two or more devices. Not so shabby for a category in its infancy.

Amazon envisions a future in which users can access their virtual personal assistant wherever they are through whatever device they have handy—be it a lamp, a car, a refrigerator, a thermostat — via Alexa.

In the face of rapid-fire adoption, Amazon, Google (and likely Apple) have some work ahead of them to figure out how to strike a balance to meet the needs of its users, developers, and advertisers. It’s still early days, but the road to developing this platform as an advertising channel is already being paved. How this will evolve is an open question, but what we do expect is that given the size and magnitude of this opportunity, the market will find a way.

At the end of the day, the increasingly complex (and exciting) opportunities in localized programmatic mean that having a programmatic partner that is built for precision targeting and scale is even more important. And know this: the role of localized marketing is only going to grow, and it’s going to happen very quickly. Advertisers who are set up to capitalize on these emerging opportunities are going to be the ones who win the day because they will be the ones primed to reach their customers with their messages – no matter the device or location.